Calls mount to reveal secrets

| 06/03/2009

(CNS): The Leader of the Opposition yesterday added his voice to mounting calls for the Confidential Relationships (Preservation) Law to be repealed as a way of mitigating the possible damage to the financial services industry in the Cayman Islands as a result of the on-shore world’s campaign to close down tax havens.

“We should give serious consideration as to whether the Confidential Relationships (Preservation) Law is still necessary in this country,” McKeeva Bush said. “This law is potentially a misnomer in any event because although it criminalizes the disclosure of unauthorized confidential information, it nonetheless allows access to foreign authorities using proper internal procedures to obtain information when investigating or prosecuting serious crimes.”

Nor is Bush alone a number of professionals working in the sector have suggested the same thing as many say it is both costly and damaging to the islands’ reputation without necessarily serving a beneficial purpose.

The issue of secrecy has played a significant part in the criticisms from the world’s leading nations about off shore centres and what they describe as tax havens. There is a broad perception that corporations and wealthy individuals are using this type of secrecy law common to offshore jurisdictions to hide their assets from the US and Euro tax collectors.

However, those who question the law’s repeal note that the while the CRPL criminalizes the unauthorized disclosure of confidential information of the kind which professionals would be obliged to protect, it does provide mechanisms through which information may be obtained if e information is needed regarding a serious crime.

According to government sources requests through these channels are fairly frequently and the CRPL also provides a way for anyone who is required to give evidence information which is defined under the Law to apply to the Court. In the case where a Cayman professional were to be subpoenaed by the Court of a foreign country to give evidence there in criminal proceedings, the professional may apply for directions.

Former chair of the Cayman Islands Monetary Authority Tim Ridley says that the authorities need to think carefully before they remove the law altogether as he said clients do have a right to privacy. He said there were grounds for broaden the gateways for disclosure and that the law maybe better described as the Data Privacy Law which gives a truer reflection of what it actually is. But, he said, over the years the law has demonstrated very well tested gateways for disclosure that have been helpful and stood Cayman in good stead.

“If you simply repeal the CRPL you may make the position worse by eliminating those gateways .And we do need to have a Law that protects legitimate privacy and other like rights,” Ridley added. “What we should do is also improve transparency outside the CRPL by making more information held by the Registrar of Companies, CIMA and at the statutory offices public.”

He said the recent introduction of the Freedom of Information Law sends a good message and something that could extend further into the private sector.

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  1. Clockwatcher says:

    For a simple, low-cost law reform that might help business in Cayman, how about changning the clocks at this time of year so we stay on East Coast time all year round.  It would simplify arranging bunsiness calls (I miss a couple of calls each year in March and November when the US changes simply for that reason alone – someone at either end gets the times wrong – it would also make linking in to other countries easier to say we are on New York time).

    We would get an hour more daylight at night in summer – which would probably help some of the local bars other businesses (the golf clubs would get more custom for sure).

    I think we should try it and see how it goes.

  2. Only a Caymanian says:

    Ladies and gentlemen, I know that this whole thing about the money laundering in Cayman has brought about alot of, can we say? “Discontent”?

    Again, we must remember that when our Government commenced on this sort of Buisnesses in Cayman Islands, that the regulations were in the system to prevent this sort of action that the UK and the USA are bringing down on us now.

    By “keeping and applying” the ejected parts that our Government had taken from the regulatory laws, and having them make the Offshore Companies comply with the Laws and Regulations, then there would be no need for all this to happen to us now, irrespective of whatever the UK and the USA do in their Countries, “We should it right”

    It is “Our Government” that got into taking out parts of the Laws and Regulations of the OffShore companies that allow the Offshore Companies to do in such a way that causes these tear downs on Our Country… So now we have our Government trying to beg the USA an the UK for pardons for Our Government wrong doings as Usual.

    Informing The Cayman Islands Government once again, to Follow suit with Good Governance and a good Government will always prevail in clean actions made by the Government.

    Quoting the late Mr. Martin Luther King in his words, “You can fool some of the people all the time, and all the people some of the time… But you cant fool All the people All the time”.

    Listenup Caymanians…. We need to vote for a good Good Government.. get rid of what we have and try some new blood in our Government, the present cant run the Government…..

    Only a Caymanian

  3. Anonymous says:

    A name change is not enough.

    1) The law as worded is gibberish and unclear.  For a statute with criminal sanctions it is appallingly drafted.

    2) The need for a Court hearing, or more accurately several court hearings, causes delays and costs, espeially given the terrible waits to get into Court and the exobirtant Court fees here – sometimes hundred of thousands of dollars of costs are expended to disclose one or two documents in a Court case.



    • Anonymous says:

      Don’t want to drag this out, but regarding the wait to get into court, it actually does not apply to the US getting information — the Chief Justice is the "Central Authority" and he is empowered to authorise disclosure once established criteria is met.

      It all happens very quickly — and does not operate under the usual routines.

      The long wait was the exact problem that was addressed several years ago in order to satisfy the US request for expeditious handling of requests for information..

  4. Jab-Jab says:

    Dudes, no one cares what the laws are. (Actually, we need stronger right-to-privacy laws, but thats another story.) What they object to is our lack of direct taxation. Canada could make it illegal to even admit that your’e a bank and as long as they continued to tax like socialists (the good kind) no one will care because no one will move their money there voluntarily. – Remember, the candidate politician didn’t say ‘change the name’ he said ‘repeal the law’.

  5. noname says:

    Other countries have data privacy laws, the don’t do much more that CRPL, but the name of the law, the presumptions, the atrocious abuse of rights under the act but those who are suspected of committing fraud, the time it takes to get approval from Court and the costs involved, all stack up to create a something that does Cayman more harm than good.

    • a Guest of the Cayman People says:

      I agree with this commentator ("Other countries have data…"). 

      As an example, Canada has a perfectly respectable privacy laws: the Privacy Act, and the Personal Information Protection and Electronic Documents Act on the federal level, plus various provincial statutes working toward the same end.  No one accuses Canada of being a tax haven or money launderer’s paradise, or of having improper laws regarding privacy, however the laws do very much the same thing.  They protect legitimate privacy but allow access where there is legitimate need.

      It will probably be best to rename and restructure the  CRPL, so that it operates (and is seen to operate) to protect legitimate interests all around but without the burden brought on by its current structure.

      • Anonymous says:

        To my mind, much of the "concerns" with the CPRL really have to do with "perceptions". And possibly to begin to address that the first thing that needs to be done is to rename the "Confidential Relationships Preservaton Law" to the "Confidential Relationships Regulation Law".

        Swap out "Preservation" with "Regulation" — after all, that is what the law does, it regulates the duties of the banker and the client and sets out circumstances under which information can be disclosed.  It is, as commentators have said, a "gateway" law — that is, it prescribes the avenues for disclosure.

        As someone who has seen this at work first hand, having travelled to Washington in a previous incarnation to deliver a check to the US Government from funds seized locally and to in turn receive funds from the US Attorney General as part of an asset-sharing agreement, I know first hand that there is a very close working relationship with US law enforcement at the highest levels.

        I have sat in on meetings in which the status of cases were discussed on both sides, along with sharing of information on what is needed to expedite matters.

        And, incidentally, one of the things that Cayman’s laws do very well is to allow for expeditious handling of matters through the courts.  And because of the close, personal working relationships, much of this work is done on a person to person basis, and therefore handled with the greatest of dispatch.

        In fact, a well oiled  legal and judicial system has emerged today from exactly those concerns back in the days before the former Narcotics Agreement and later the Mutual Legal Assistance Treaty.  The US was concerned that by the time matters got into court, they had lost valuable time and criminals were slipping through their hands.

        But, with the landmark Mutual Legal Assistance Treaty (MLAT) and fine tuning of the CPRL that is no longer the case, and as the article above does say, if the US has any of those concerns they would raise them.  They are not raising them because they do not exist. 

        I think there is frustration because of the alleged outflow of tax dollars — but legitimate customers have a right to privacy.  If the US has a case to show that people are defrauding the US Government they must make this case.  There is a well oiled machinery locally and internationally that deals with requests and no legitimate request for information is left out in the cold.  And, again, if they were, the US has a big voice that it is not afraid to use.


      • Anonymous says:

        I agree with the comments from Jab-jab and Guest of the Cayman People. They have got the correct handle on this.